Navy awards $83.3M computer systems design contract to Boeing, a sole-source procurement

Contract Overview

Contract Amount: $83,309,708 ($83.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-05-15

End Date: 2023-09-30

Contract Duration: 1,964 days

Daily Burn Rate: $42.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: BASE PERIOD - LABOR

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $83.3 million to THE BOEING COMPANY for work described as: BASE PERIOD - LABOR Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competition. 2. Significant duration of the contract (over 5 years) suggests a long-term need for these services. 3. Cost-plus-fixed-fee contract type may incentivize cost overruns if not closely monitored. 4. The specific NAICS code (541512) indicates a focus on computer systems design and integration. 5. Awarded by the Department of the Navy, highlighting defense sector IT needs. 6. The contractor, Boeing, has extensive experience in defense contracting, suggesting a known entity for this type of work.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more detailed cost breakdowns and comparisons to similar sole-source procurements. The cost-plus-fixed-fee structure requires rigorous oversight to ensure value for money. Given the sole-source nature, there's a risk that pricing may not reflect competitive market rates. However, the contractor's established presence in the defense sector might offer some efficiencies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or when urgency precludes a competitive process. The lack of competition means that pricing and terms were negotiated directly with The Boeing Company, potentially limiting opportunities for cost savings that could arise from a bidding process.

Taxpayer Impact: For taxpayers, sole-source awards can mean paying a premium compared to what might be achieved through open competition. It also reduces transparency in price discovery.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Department of the Navy, which receives computer systems design services. Services delivered likely involve the design, development, integration, and maintenance of complex computer systems critical for naval operations. The geographic impact is likely concentrated around naval facilities and contractor sites, primarily in California where the contract is noted. Workforce implications include employment opportunities for skilled IT professionals at The Boeing Company and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher spending if not managed effectively.
Long contract duration may indicate a lack of agile procurement strategies or evolving requirements.
Lack of transparency in the procurement process due to sole-source nature.

Positive Signals

Award to a major defense contractor (Boeing) suggests a high likelihood of meeting complex technical requirements.
Contract duration implies a stable, long-term relationship for critical IT services.
Focus on computer systems design is essential for modern defense capabilities.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design services. The defense industry is a significant consumer of such services, often requiring highly specialized and secure solutions. The market for defense IT is characterized by large, established contractors like Boeing, who possess the security clearances and expertise to handle sensitive government projects. Comparable spending benchmarks would involve analyzing other large IT service contracts awarded by the Department of Defense or other federal agencies for similar system design and integration work.

Small Business Impact

This contract does not appear to involve a small business set-aside, as it was awarded to The Boeing Company, a large aerospace and defense corporation. There is no explicit information regarding subcontracting plans for small businesses within the provided data. The absence of a small business set-aside means that opportunities for small businesses to directly participate in this specific contract are likely limited, though Boeing may engage them as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the cost-plus-fixed-fee structure, rigorous financial oversight and performance monitoring are crucial to ensure the contractor is delivering services efficiently and within agreed-upon parameters. Transparency is limited due to the sole-source nature, but contract modifications, performance reports, and audits would be key accountability measures. Inspector General jurisdiction would apply for any investigations into fraud, waste, or abuse.

Related Government Programs

Department of Defense IT Modernization Programs
Naval Information Warfare Systems Command (NAVWAR) Contracts
Large-Scale IT Systems Integration Contracts
Defense Contractor IT Services

Risk Flags

Sole-source procurement
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $83.3 million to THE BOEING COMPANY. BASE PERIOD - LABOR

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $83.3 million.

What is the period of performance?

Start: 2018-05-15. End: 2023-09-30.

What is the historical spending pattern for computer systems design services by the Department of the Navy with The Boeing Company?

Analyzing historical spending requires access to broader contract databases. However, given Boeing's status as a major defense contractor, it's probable that the Department of the Navy has awarded numerous contracts to Boeing for IT services, including computer systems design, over many years. This specific $83.3 million contract represents a significant, but potentially not isolated, investment. To understand the pattern, one would need to aggregate all similar contracts awarded to Boeing by the Navy, noting trends in contract value, duration, and service type. This would reveal if this award is consistent with past engagements or represents a new scale of investment in this area.

How does the cost-plus-fixed-fee (CPFF) structure of this contract compare to other IT service contracts awarded by the Navy?

The Cost-Plus-Fixed-Fee (CPFF) contract type is common in defense contracting, particularly for research, development, and complex system design where costs can be uncertain. It allows the contractor to recover allowable costs plus a predetermined fixed fee representing profit. Compared to fixed-price contracts, CPFF offers more flexibility for the government when requirements are evolving or difficult to define precisely upfront. However, it carries a higher risk of cost growth if the contractor's costs exceed estimates. The Navy uses CPFF for various IT services, but the appropriateness depends heavily on the specific project's nature and the government's ability to define requirements and monitor costs effectively. For routine IT services, fixed-price contracts are often preferred for better cost control.

What are the specific computer systems being designed or integrated under this contract?

The provided data identifies the service as 'Computer Systems Design Services' (NAICS 541512) but does not specify the particular systems. Given the contractor (Boeing) and the agency (Department of the Navy), these systems are likely related to naval operations, potentially including command and control systems, intelligence, surveillance, reconnaissance (ISR) platforms, logistics management systems, or cybersecurity infrastructure. The exact nature of the systems would typically be detailed in the contract's Statement of Work (SOW), which is not included in the summary data. These systems are often highly specialized and critical to national defense.

What is Boeing's track record with sole-source IT contracts from the Department of Defense?

The Boeing Company has a long history of receiving sole-source contracts from the Department of Defense across various domains, including IT services. As a prime defense contractor, Boeing often possesses unique capabilities, proprietary technologies, or existing system integration expertise that makes it the logical or only choice for certain complex projects. While sole-source awards are scrutinized, they are often justified for reasons of national security, technological necessity, or continuity of essential services. Boeing's extensive experience suggests they are adept at navigating the requirements and oversight associated with such contracts, though the lack of competition inherently limits price discovery.

What are the potential risks associated with a sole-source, cost-plus-fixed-fee contract for computer systems design?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature means there was no competitive bidding, potentially leading to a higher price than if multiple vendors had competed. The government did not benefit from the price discovery inherent in a competitive process. Secondly, the Cost-Plus-Fixed-Fee (CPFF) structure, while offering flexibility, can incentivize the contractor to incur higher costs, as their profit (the fixed fee) is guaranteed regardless of the final cost, provided allowable costs are met. Effective government oversight is critical to mitigate these risks by closely monitoring expenditures, ensuring efficiency, and verifying the necessity of all costs incurred.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002417R4117

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 5301 BOLSA AVE, HUNTINGTON BEACH, CA, 92647

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $84,913,157

Exercised Options: $84,913,157

Current Obligation: $83,309,708

Actual Outlays: $5,023,652

Subaward Activity

Number of Subawards: 9

Total Subaward Amount: $1,136,032

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline